It's been a good week for readers trying to save. Last month we suggested that you panic about your pension provisions. With George Osborne having made it pretty clear that he wasn't done with his tax relief tinkering, we figured there was a very strong chance that higher earners would see their reliefs slashed. So we told you to pile cash in while you still could. I suspect a good many of you have done just that (I certainly have). That's good saving is almost never bad. But the good news is that the urgency seems to be gone.
Osborne has let it be known that he doesn't intend to make more major changes to the pension system in next week's Budget: you no longer need to feel panicked into super-scrimping in order to get a few more tax-free pennies into your pension wrapper before the 15th. That said, we don't think you should relax. The UK government is still broke and the tax relief on pension contributions is still very expensive. This isn't going away: at some point after the referendum, the 25% tax-free lump sum will go and so will higher and top-rate tax relief. This is not an "if", but a "when".
So what should those of us who have shovelled extra cash into our pensions now invest in? The other reason I say it has been a good week for MoneyWeek readers is because most of you (those of you who pay any attention, at least) will be holding some gold. That's doing fabulously well up 20% this year. We think that will continue as does one of our favourite strategists, Russell Napier.
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People are gradually realising where policy is likely to go next; debt monetisation, helicopter money and all manner of fiscal distributions that will eventually cause inflation. Gold, Napier says, has just entered a 20- to 30-year bull market. Best have some. It might offer you no income, but it should come good on capital gains.
In this week's cover story,we look at the UK's top dividend-paying shares. What's safe and what's not? One key point to note is that almost all dividends are safer than they should be in the short term. The very low interest-rate environment means that the big shareholders are desperate for yield and are putting huge pressure on firms to keep dividends high: "if we cut the dividend we will be out of a job", one CEO told me last week. That might be nice for now. But it hints at long-term problems. Firms that pay out too much cash in dividends can't invest for future growth. If we get more now, I'm afraid we may get less in the future.
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SIPP holders to get cash warnings and be offered default fundsNews Providers will be required to offer investors a default fund and must warn customers of the inflationary risk of cash savings the regulator has said. What the new rules mean for your retirement pot?
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Zoopla: Asking price discounts hit a five-year high – is now the time to buy a property?
News Zoopla’s October House Price Index shows sellers are accepting discounts of 5.5% on average to secure a sale – we reveal where homeowners are taking the biggest asking price cuts
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The myth of hypothecated taxes
Editor's letter The government wants to add a penny on our National Insurance contributions to pay for social care. But it won’t, says Merryn Somerset Webb. It will just vanish into the black hole of our public finances.
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Should capital gains tax be higher or lower?
Editor's letter Capital gains tax is up for review. There are plenty of long-term arguments to be had about this. But in the short term, Merryn Somerset Webb has a few ideas for the government should it want a little cash inflow.
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The best thing you can do for your children is to secure your own finances
Editor's letter The "Bank of Mum and Dad" is now the 11th-largest mortgage lender in the UK. But giving your children money may not be the best way to help them, says Merryn Somerset Webb.
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Inheritance tax: just abolish the entire thing
Editor's letter Why not abolish inheritance tax and replace it with a gift tax on the recipients of unearned cash – wherever it comes from?
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Save into your pension while you can
Editor's letter Fiddling with pension tax relief could be a nice little earner for a government hungry for cash, says Merryn Somerset Webb. Save what you can while you can.
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Good news for defined-benefits pensions
Editor's letter A rate rise or two could make the defined-benefits pensions deficit simply disappear, says Merryn Somerset Webb. In the meantime, there are a couple of things pension fund managers could do to help things along.
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Pensions: the counter-revolution
Editor's letter An awful lot of people are beginning to wish Geogre Osborne had never started down the path of pensions reform, says Merryn Somerset Webb.
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Three pension traps for the unwary
Editor's letter Pensions Freedom Day is almost upon us and you're right to be excited, says Merryn Somerset Webb. Just watch out for these three pitfalls.
